UK scrambles to promise more powers if Scots reject independence

LONDON The British government is scrambling to respond to a lurch in the opinion polls towards a vote for Scottish independence this month by promising a range of new powers for Scotland if it chooses to stay within the United Kingdom.

British finance minister George Osborne said on Sunday that plans would be set out in the coming days to give Scotland more autonomy on tax, spending and welfare if Scots vote against independence in a historic referendum on Sept. 18.

Prime Minister David Cameron had, ironically, vetoed a third ballot option for greater devolution, betting that the stark choice of yes or no to independence would deliver a clear victory for the status quo as cautious voters turned away from an uncertain future.

That looked like a precarious calculation after a YouGov poll for the Sunday Times showed supporters of independence had taken their first opinion poll lead since the referendum campaign began.

With less than two weeks to go before the vote, the poll put the "Yes" to independence campaign on 51 percent and the "No" camp on 49 percent, overturning a 22-point lead for the unionist position in just a month.

"You will see in the next few days a plan of action to give more powers to Scotland ... Then Scotland will have the best of both worlds. They will both avoid the risks of separation but have more control over their own destiny, which is where I think many Scots want to be," Osborne told the BBC.

"More tax-raising powers, much greater fiscal autonomy ... more control over public expenditure, more control over welfare rates and a host of other changes."

Osborne said the changes, being agreed by all three major parties in the British parliament, would be put into effect the moment there was a 'no' vote in the referendum.

His comments echo those of former British Prime Minister and opposition Labour party lawmaker Gordon Brown, who said on Friday he would spearhead a push for Scotland to gain more powers if it voted against independence.

All three major British political parties have already set out differing proposals on extra powers for Scotland if it rejects independence. Former finance minister Alistair Darling, who is leading the pro-union Better Together campaign, said the upcoming plans would not go beyond these.

"What is being announced this week is simply the timetable, the procedure for implementing them, which I think people will want to know," Darling told Sky news.

INDEPENDENCE BLITZKRIEG

Scotland already enjoys a large measure of devolution, having had its own parliament since 1999 with the power to legislate in policy areas such as education, health, the environment, housing and justice.

Further devolution, often referred to as "devo max" could see all powers handed over to Scotland except defence and foreign affairs. Polls have previously shown many Scots would favour this over outright independence, and Scottish First Minister Alex Salmond had unsuccessfully pushed to have it as an option on the referendum ballot paper.

Nicola Sturgeon, deputy leader of the pro-independence Scottish National Party, welcomed the YouGov poll as a "very significant moment" in the campaign but rejected talk of more devolved powers for Scotland.

"I don't think people are going to take this seriously. If the other parties had been serious about more powers, then something concrete would have been put forward before now and remember the other parties were desperate to keep that option off the ballot paper," she told Sky news.

Salmond described the plans as a "panic measure".

"This is a ridiculous position being put forward by a campaign ... in terminal trouble," he told the BBC. "They have failed to scare the Scots, now they are trying to bribe us. That won't work either because people have come to the realisation that we can take the future of this country into our hands."

After months of surveys showing nationalists heading for defeat, recent polls have seen the gap narrow to the extent that they raise the real prospect that secessionists could achieve their goal of breaking the 307-year-old union with England.

"A two-point gap is too small for us to call the outcome. But the fact that the contest is too close to call is itself remarkable, as Better Together seemed to have victory in the bag," YouGov President Peter Kellner wrote on his blog.

"In the past four weeks support for the union has drained away at an astonishing rate. The Yes campaign has not just invaded No territory; it has launched a blitzkrieg."

NO IFS, NO BUTS, NO POUND

A separate poll on Sunday by Panelbase, commissioned by the pro-independence campaign, showed support for a breakaway rising but still short of a majority at 48 percent. When undecideds were included, that fell to 44 percent.

The late showing by the independence camp has hit sterling on the foreign exchange markets and electrified Britain's political classes as they returned from the summer break.

The pound suffered its worst week against the dollar in more than a year after YouGov's last poll on Monday showed a sharp narrowing in the lead of the anti-independence campaign.

"Sterling looks to be set for another challenging week," said Howard Archer, chief UK and European economist at IHS Global Insight. "While there will likely be a significant reaction early on in the week ... how much further the pressure on sterling ramps up will likely depend on whether polls continue to show the yes vote improving."

A vote to break away would be followed by negotiations with London on what to do about the currency, national debt, North Sea oil and the future of Britain's nuclear submarine base in Scotland ahead of independence pencilled in for March 24, 2016.

The pro-independence side has said it believes the rest of Britain would agree to a currency union in the event of a Scottish breakaway, allowing the new state to use the pound. This has been rejected by Britain's three main political parties, and Osborne remained adamant on Sunday.

"No ifs, no buts, we will not share the pound if Scotland separates from the rest of the UK," he said.

(Additional reporting by William Schomberg and Alistair Smout; Editing by Will Waterman)

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